Stansberry v. McDowell

• Decision Date: 25 May 1916
• Docket Number: No. 1398.,1398.
• Parties: STANSBERRY et al. v. McDOWELL et al.
• Court: Missouri Court of Appeals

186 S.W. 757

STANSBERRY et al. v. McDOWELL et al.

No. 1398.

Springfield Court of Appeals. Missouri.

May 25, 1916.

Appeal from Circuit Court, Greene County; Guy D. Kirby, Judge.

Action by Ida Stansberry and another against James McDowell and another. From a judgment for plaintiffs, defendants appeal. Affirmed conditionally.

Heitt & Scott and Barton & Impey, all of Houston, and Watson & Page, of Springfield, for appellants. Barbour & McDavid, of Springfield, and Lamar, Lamar & Lamar, of Houston, for respondents.

ROBERTSON, P. J.

Plaintiffs recovered in a jury trial, and defendants have appealed. The action is for damages caused by a wrongful foreclosure of a deed of trust on 240 acres of land in Texas county owned by the plaintiffs. The cause originated in Texas county and was taken on a change of venue to Greene county. The verdict was for $2,000 actual and $2,000 punitive damages, but before the motion for a new trial was overruled the plaintiffs remitted $1,000 of the actual and $500 punitive damages, leaving a judgment of $2,500.

The deed of trust which was foreclosed was dated April 30, 1909, and was given to secure a note for $600 of even date therewith, payable to the order of defendant Durnell, a real estate dealer, due one year after its date, drawing interest at the rate of 8 per cent. per annum and executed by the then owners of the land. The maker of the note paid $100 thereon. Afterwards one Smith became the owner of the land. It was advertised for sale under the deed of trust when Smith paid $100 more thereon, $48 interest, which was $8 more than was due, and paid the costs of the publication of the foreclosure notice, had the proceedings abandoned, and secured from the defendant McDowell (then a holder or agent of the holder of the note, a fact hereafter to be discussed) an extension of the note until May 22, 1912. A receipt for these payments was issued at the instance of McDowell reciting the extension. Thereafter, in December, 1911, Smith sold the land to the plaintiffs, who then lived in Grove county, Kan.

At the time Smith made the payments and secured the extension, there remained due thereon only $400. When he paid the interest, it was computed on $600, instead of on $500, as it should have been calculated. He afterwards discovered among his papers the receipt which was given to the prior owner when the first payment of $100 was made on the note. When he demanded the return of the $8 overpayment on interest, Durnell requested the receipt. Smith, although he had then sold the land to plaintiffs and turned the receipt over to them, got it and mailed it to the Cabool National Bank as theretofore requested by Durnell. Later, in response to letters written by Smith to McDowell and Durnell, they denied all knowledge of the receipt. After plaintiffs acquired the land, they wrote to the Cabool National Bank at Cabool in Texas county, of which defendant McDowell was cashier, giving the description of the land and stating that they wanted to pay the mortgage off. Under date of April 9, 1912, the defendant McDowell answered over the name of the bank as follows:

"Yours of the 30 of March was only received to-day and in reply will say at present we do not find that we have a loan upon this land. It must be something we have for collection or something of that kind. In fact as we are national bank and do not have but little to do with real estate loans. However will give this little attention and see if we can discover what loan it is."

This letter the plaintiffs sent to Smith asking him to explain it, as they could not locate the mortgage. A Mr. Bolch bought the note from defendant Durnell, paying therefor $490, and afterwards upon a written guaranty signed by defendant McDowell he returned the note to Durnell for collection. On May 9, 1912, the sheriff of Texas county, as successor in trust and acting trustee in the deed of trust, commenced advertising a notice of a sale of the land under the deed of trust to take place on June 8, 1912. The publication of the notice continued, as required by law, and upon the date mentioned therein the property was offered for sale, and defendant McDowell became the purchaser for the sum of $200 and a deed was made to him. Under date of November 22, 1912, McDowell and his wife for a cash consideration of $1,500 conveyed the land by warranty deed to R. V. Forsythe. During all of the time to which reference is made above the land was subject to a deed of trust that was prior to the one involved here. It secured a note of $1,500.

A fuller and more specific statement of the facts connecting the defendants with a wrongful foreclosure is necessary. Bolch would not state when he bought the note, but "guessed" it was after the date of the extension. Durnell testified that he thought he sold it in January, 1912. Nothing was told Bolch about the extension, nor about one of the payments, but which one is not made clear. From the testimony it may be concluded that it was the last payment and the extension of which he was kept ignorant. It was about May 6, 1912, that Bolch turned the note over to Durnell. Before turning it over, he refused to accept Durnell as the responsible party, and McDowell, at the request of Durnell, gave to Bolch a written guaranty that it would be paid. Durnell claims that he was liable as an indorser of the note, but it was not produced at the trial because he said he had mailed it to the publisher of the newspaper in which the notice was run and that it was lost. After the land was sold under the foreclosure proceedings, McDowell paid Bolch "five hundred and forty some odd dollars, interest and all." In a letter to Smith dated December 19, 1911, McDowell disclosed that he knew the owner of the note. Smith had written to him about the receipt for the payment of the $100 which Smith had sent to the bank in order to get definitely settled the credit for that amount, and in answering the letter McDowell stated that "the party that owns the note is out of town." Again, McDowell in a letter to Smith dated February 1, 1912, in referring to the receipt, stated that Durnell must have asked him to mail it; that Durnell was then in Oklahoma; and that when he returned he would have him look it up and see if he ordered it. This promised search for the receipt seems to have proceeded no further, and nothing seems to have passed between the parties until McDowell wrote to plaintiffs on April 9, 1912, a copy of which letter is set out above. This letter was written in response to one from plaintiffs inclosing postage for a reply. They had written one previous to this to which they received no answer. After getting McDowell's letter of April 9, 1912, they wrote to Durnell, but got no answer. At the time plaintiffs bought the land, there was a tenant thereon, and plaintiffs were to have the landlord's share of the crops for the year of 1912 and corresponded with the tenant, after they acquired the land, concerning the same. After McDowell bought the land at the foreclosure sale, he gave this tenant $110, for which sum he vacated the premises. In addition to trying to locate the note by writing to defendant, they wrote to various other parties in Texas county. Failing to get any information, they went to Texas county in December of 1912, then learned the true condition, and soon thereafter brought this suit.

We think it fairly, if not conclusively, deducible from the facts and circumstances in this case that defendants conceived two things to be possible: One, that they had matters so arranged, after getting the receipt from Smith for the $100, that by transferring the note to Bolch they could prevent any credit of that amount thereon; and, second, that they could acquire the title to this land without the knowledge of plaintiffs. At almost the very time Smith was writing to them about this receipt Durnell transfers the note to Bolch for $90 more than was due thereon. In less than 30 days after McDowell wrote the letter to plaintiffs, he is making a guaranty of the full payment of the note on condition that Bolch would return it to Durnell and the same note which was not due, according to the statement contained in the receipt issued at his instance less than six months previous. The proceedings to foreclose are immediately instituted, and at the sale McDowell buys the land for $200; but true to Bolch he pays him $100 more than is due on the note, sells the land for $1,500 cash, proved by some witnesses to be worth $2,500 over and above the first deed of trust, and buys off plaintiffs' tenant for $110; all while defendants must have been conscious of the fact and resting secure in the belief that plaintiffs were ignorant of what was transpiring.

The first point urged here by appellants is based on what are essential allegations and necessary proof in actions ex contractu or exdelicto as for deceit. Considerable confusion will be eliminated, and most of the points urged by appellants cleared away, if we properly classify the conduct of defendants. That many general rules governing actions for fraud and deceit based on business transactions between two or more individuals is not applicable here we think cannot be successfully controverted. The gist of what defendants did with reference to plaintiffs' equity of redemption may properly be labeled as in the nature of a "conversion," not applying that term in its technical sense; but it has the principal features of that offense. Rodgers v. Barnes, 169 Mass. 179, 47 N. E. 602, 604, 38 L. R. A. 145. Defendants saw that plaintiffs were ignorant of the whereabouts of the note being secreted by them, and, taking advantage of that ignorance, they proceeded to and did convert the equity of redemption in the land to their own use and convey the title to it to an innocent purchaser. The note was made payable at said Cabool National Bank, but it was evident to defendants that plaintiffs either did not know that fact,...